The World Bank
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
1818 H Street, N.W.
Washington, D.C. 20433
(202) 477-1234
Cable Address: INTBAFRAD
INTERNATIONAL DEVELOPMENT ASSOCIATION
U.S.A.
Cable Address: INDEVAS
October 15, 1999
Mr. Roque Fernández
Ministro de Economía y Obras
y Servicios Públicos
Hipólito Yrigoyen 250
1086 Buenos Aires, Argentina
Re:
Loan No. 4405-AR (Special Structural Adjustment Loan) Amendment to
the Loan Agreement
Dear Sir:
Please refer to the Loan Agreement between International Bank for Reconstruction and Development
(the Bank) and the Argentine Republic (the Borrower) dated November 11, 1998 (the Loan Agreement)
with regard to the above-captioned Loan. We are pleased to acknowledge receipt of your notice pursuant to
Section 6.01 of the General Conditions to cancel two hundred fifty million Dollars ($250,000,000) of the
second tranche of the Loan, contingent upon and effective as of the date of the effectiveness of the
amendment to the Loan Agreement contained in this letter agreement and to inform you that, pursuant to
your request and our recent discussions on the subject, the Bank agrees to amend the Loan Agreement as set
forth below.
1.
WHEREAS Clause (B) is hereby amended to read as follows in its entirety: “on the basis, inter alia,
of the foregoing, the Bank has decided in support of the Program to provide such assistance by making the
Loan to the Borrower in three tranches as hereinafter provided and by providing the Guarantee of the
Notes;”.
2.
Section 1.01(a) is hereby amended by adding “and Guarantee” after “Loan”.
3.
A new Section 1.01 (e) is hereby added immediately after Section 1.01 (d), to read as follows in its
entirety: “Section 6.02 (i) is modified to read: “(i) A representation made by the Borrower in or pursuant
to the Loan Agreement, or any statement furnished in connection therewith, and intended to be relied upon
by the Bank in making the Loan or providing the Guarantee, shall have been incorrect in any material
respect.”.
4.
The former Section 1.01 (e) is hereby renumbered as Section 1.01 (f) and amended by adding “and
Guarantee” after “Loan” and by deleting “and” at the end thereof.
5.
The former Section 1.01 (f) is hereby renumbered as Section 1.01 (g) and amended by replacing the
period at the end thereof with “;”.
6.
A new Section 1.01 (h) is hereby added immediately after Section 1.01 (g), to read as follows in its
entirety: “Section 9.03 (a) is modified to read: “(a) It is the policy of the Bank, in making loans to, or in
providing guarantees for loans to, its members not to seek in normal circumstances, special security from
the member concerned but to ensure that no other external debt shall have priority over its loans and
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amounts due to the Bank from the member concerned in consequence of such guarantees in the allocation,
realization or distribution of foreign exchange held under the control or for the benefit of such member;”
7.
A new Section 1.01 (i) is hereby added immediately after Section 1.01 (h), to read as follows in its
entirety: “Section 9.03(a)(i) is modified to read: “(i) To that end, if any lien shall be created on any public
assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for
the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign
exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank,
equally and ratably secure the principal of, and interest and commitment charges on, the Loan and the
amounts payable by the Borrower under Article V of this Agreement, which, for purposes of this Section
only, shall be deemed to be equal to the face amount of the Notes then benefiting from the Guarantee, and
the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect;
provided, however, that if for any constitutional or other legal reason such provision cannot be made with
respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall
promptly and at no cost to the Bank secure the principal of, and interest and commitment charges on, the
Loan and the amount payable by the Borrower under Article V of this Agreement by an equivalent lien on
other public assets satisfactory to the Bank; and”
8.
A new Section 1.01 (j) is hereby added immediately after Section 1.01 (i) to read as follows in its
entirety: “Section 12.05 is modified to read: “If and when (i) the entire principal amount of the Loan
withdrawn from the Loan Account and the premium, if any, on the prepayment of the Loan and all interest
and commitment charges which shall have accrued on the Loan shall have been paid, and (ii) the Guarantee
shall no longer be in effect and the Borrower shall have paid all amounts payable under Article V of the
Loan Agreement, the Loan Agreement and all obligations of the parties thereunder shall forthwith
terminate.”.
9.
Section 1.02 (g) is hereby amended by replacing the period at the end thereof with the word “;”.
10.
A new Section 1.02 (h) is hereby added immediately after Section 1.02 (g), to read as follows in its
entirety: “ “Notes” means the six series of Zero-Coupon Notes to be issued by the Borrower in an aggregate
principal amount at maturity of one billion five hundred million Dollars ($1,500,000,000), upon the terms
and conditions contained in the Underwriting Agreement;”.
11.
A new Section 1.02 (i) is hereby added immediately after Section 1.02 (h), to read as follows in its
entirety: “ “Guarantee” means the guarantee in respect of the Notes to be issued by the Bank on the terms
and conditions set forth in the Supplementary Agreement to the Fiscal Agency Agreement dated October
15, 1999 (the “Supplementary Agreement”), referred to in the Underwriting Agreement, but only on the
condition that the Borrower agrees to pay to the Bank all amounts paid by the Bank, directly or indirectly, in
relation to or arising from the Guarantee and to undertake such other obligations to the Bank in respect of
the Guarantee as are set forth in this Agreement;”.
12.
A new Section 1.02 (j) is hereby added immediately after Section 1.02 (i), to read as follows in its
entirety: “ “Underwriting Agreement” means the Underwriting Agreement dated October 14, 1999 between
the Borrower, as issuer of the Notes, and Goldman, Sachs & Co. and J.P. Morgan Securities Inc., as
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underwriters (the “Underwriters”), whereby the Underwriters have agreed to purchase the Notes, upon the
terms and conditions contained in the Underwriting Agreement;”.
13.
A new Section 1.02 (k) is hereby added immediately after Section 1.02 (j), to read as follows in its
entirety: “ “Note Closing Date” means the closing date for the issuance of the Notes as set forth in the
Underwriting Agreement, “Fiscal Agency Agreement” has the meaning set forth in the Underwriting
Agreement, and “Fiscal Agent” has the meaning set forth in the Prospectus Supplement dated October 12,
1999 relating to the offering of the Notes (the “Prospectus Supplement”); and ”.
14.
A new Section 1.02 (l) is hereby added immediately after Section 1.02 (k), to read as follows in its
entirety: “ “Net Note Proceeds” means the proceeds from the issuance of the Notes, less the aggregate
amount that is necessary to pay: (i) to the Bank the guarantee fee specified in Section 5.02 of this
Agreement; and (ii) those amounts payable to the Underwriters, the Fiscal Agent, and the other agents and
advisors engaged by the Borrower for the purposes of the Notes and the other costs associated with the
issuance of the Notes as specified in the Underwriting Agreement or as otherwise agreed with such
Underwriters, Fiscal Agent, agents or advisors, as the case may be.”.
15.
Section 2.02 (a) is hereby amended to read as follows in its entirety: “The Borrower shall open, prior
to furnishing to the Bank the first request for withdrawal from the Loan Account, and thereafter maintain in
its central bank, a deposit account in Dollars on terms and conditions satisfactory to the Bank. All
withdrawals from the Loan Account shall be deposited by the Bank into the Deposit Account. In addition,
the Borrower shall deposit the Net Note Proceeds into the Deposit Account on the Note Closing Date. The
Borrower shall not allow any other amounts from any other source to be deposited in the Deposit Account.”.
16.
Section 2.02 (b) is hereby amended to read as follows in its entirety: “Subject to the provisions of
paragraphs (c), (d) and (e) of this Section, the Borrower shall be entitled to use the proceeds of the Loan
withdrawn from the Loan Account and deposited in the Deposit Account and the Net Note Proceeds
deposited in the Deposit Account in support of the Program”.”
17.
Section 2.02 (c) is hereby amended to read as follows in its entirety: “The Borrower undertakes that
the proceeds of the Loan and the Net Note Proceeds shall not be used to finance expenditures excluded
pursuant to the provisions of Schedule 1 to this Agreement. If the Bank shall have determined at any time
that any proceeds of the Loan shall have been used to make a payment for an expenditure so excluded, the
Borrower shall, promptly upon notice from the Bank: (i) deposit into the Deposit Account an amount equal
to the amount of said payment; or (ii) if the Bank shall so request, refund such amount to the Bank.
Amounts refunded to the Bank upon such request shall be credited to the Loan Account for cancellation. If
the Bank shall have determined at any time that any of the Net Note Proceeds shall have been used to make
a payment for an expenditure so excluded, the Borrower shall, promptly upon notice from the Bank, deposit
into the Deposit Account an amount equal to the amount of such payment.”.
18.
The introductory paragraph of Section 2.02 (e) is hereby amended to read as follows in its entirety:
“No withdrawals shall be made from the Loan Account after the aggregate of the proceeds of the Loan
withdrawn from the Loan Account shall have reached the equivalent of $1,775,250,000 unless:”.
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19.
A new Section 3.03 is hereby added immediately after Section 3.02, to read as follows in its entirety:
“Without limitation or restriction upon any of its other obligations under this Agreement, the Borrower
hereby unconditionally undertakes to the Bank to perform punctually all of its obligations under the Notes,
the Fiscal Agency Agreement and any related agreements.”.
20.
A new Section 3.04 is hereby added immediately after Section 3.03, to read as follows in its entirety:
“The Borrower shall notify the Bank prior to agreeing to (i) any amendment, waiver, termination or other
change to the Notes or the Supplementary Agreement or (ii) any amendment, waiver, termination or other
change to any other provision of the Fiscal Agency Agreement and any related agreement that may
materially affect the rights or obligations of the Bank under the Notes, the Supplementary Agreement or any
other provision of the Fiscal Agency Agreement or any related agreement. In addition, the Borrower shall
obtain the written consent of the Bank prior to agreeing to any such amendment, waiver, termination or
other change .”.
21.
A new Section 3.05 is hereby added immediately after Section 3.04, to read as follows in its entirety:
“The Borrower shall promptly inform the Bank of any event or circumstance which could adversely affect
its ability to perform punctually its obligations under this Agreement, the Notes, the Fiscal Agency
Agreement and any related agreement.”.
22.
Article V and Article VI are hereby renumbered to be Article VI and Article VII, respectively,
Sections 5.01 and 5.02 are hereby renumbered to be Sections 6.01 and 6.02, respectively, Sections 6.01 and
6.02 are hereby renumbered to be Sections 7.01 and 7.02, respectively, and a new Article V is hereby added,
to read in its entirety as set forth in Attachment A to this letter.
23.
The first paragraph of Schedule 1 is hereby amended to read as follows in its entirety: “For purposes
of Section 2.02(c) of this Agreement, the proceeds of the Loan and the Net Note Proceeds shall not be used
to finance any of the following expenditures:”.
24.
Paragraph 7 of Schedule 1 is hereby amended by inserting “ or the Notes” after “Loan”.
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Please confirm your agreement to the foregoing amendments by signing and dating this letter in the
spaces provided below. This amendment letter may be executed in two counterparts, each of which shall be
an original. Upon your confirmation, please return one fully executed original to us. The provisions of this
amendment letter will become effective as of the date first above written upon receipt by the Bank of one
fully executed original of this amendment letter. A new amortization table for Loan 4405-AR will be sent to
you shortly, reflecting the cancellation of two hundred fifty million Dollars ($250,000,000) of the Loan.
Very truly yours,
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
/s/ David de Ferranti
Regional Vice President
Latin America and the Caribbean
ARGENTINE REPUBLIC
/s/ Roque Fernández
By:
Authorized Representative
Date: October 15, 1999
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ATTACHMENT A
ARTICLE V
Indemnity
Section 5.01. (a) Without limitation or restriction upon any of its obligations under this
Agreement, the Borrower hereby irrevocably and unconditionally: (i) agrees to reimburse the Bank
forthwith on demand, or as the Bank may otherwise direct, any amount paid by the Bank under the
Guarantee in Dollars (or if the Bank has reasonably determined that an extraordinary situation has arisen
under which the Bank has been required to purchase Dollars with another currency for the purposes of
such payment, in such other currency), together with interest thereon at the rate per annum specified by
the Bank in respect of such currency, which rate shall be equal to the interest rate then in effect for the
Loan, from the date such payment is made by the Bank until such amount is reimbursed in full by the
Borrower; and (ii) agrees to indemnify the Bank on demand and hold the Bank harmless against all
actions, proceedings, liabilities, claims, losses, damages, costs and expenses suffered or incurred by the
Bank, directly or indirectly, in relation to or arising out of the Guarantee (except as otherwise provided
in Section 10.04(i) of the General Conditions); provided, however, that the Borrower will not be liable
in any such case to the extent that any such action, proceeding, liability, claim, loss, damage, cost or
expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Prospectus Supplement in reliance upon and in conformity with written
information furnished to the Borrower by or on behalf of the Bank specifically for use in connection
with the preparation of the Prospectus Supplement.
(b) The Borrower hereby irrevocably authorizes the Bank to comply with any demand given by
the Fiscal Agent to the Bank in connection with the Guarantee and to make any payments which may be
due or claimed from or made upon the Bank under the Guarantee. The Bank shall notify the Borrower
of any such demand, but failure to give such notice shall in no way affect the Bank’s obligation to make
payment under the Guarantee, or the irrevocable and unconditional obligation of the Borrower to
reimburse or indemnify the Bank pursuant to this Agreement. The Borrower further agrees that it shall
not be incumbent on the Bank to inquire whether or not any such demands or payments are in fact due,
or whether or not any dispute exists between the Borrower and the holders of the Notes. The Borrower
agrees that any such demand shall, as between the Borrower and the Bank, be conclusive and binding
evidence that the demand is properly made and payment is properly due under the Guarantee.
(c) The Borrower hereby agrees that any payment required to be made by the Borrower to the
Bank pursuant to the terms of Article V of this Agreement shall be:
(i) paid at such places as the Bank shall reasonably request by written notice;
(ii) paid without restrictions of any kind imposed by, and without deduction for, and free
from, any taxes, duties, charges or withholdings levied by, or in the territory of, the Borrower; and
(iii) in the case of payments required to be made pursuant to Section 5.01(a)(i) above,
applied first to pay all sums then due to the Bank in respect of interest as specified in Section 5.01(a)(i)
above, then, second, and after the payment of same, to pay all sums then due to the Bank in respect of
any amount paid by the Bank under the Guarantee as specified in Section 5.01(a)(i) above.
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Section 5.02. In consideration of the Bank providing the Guarantee, the Borrower shall pay to
the Bank, on the Note Closing Date, by electronic wire transfer, in same day immediately available,
freely transferable funds, a guarantee fee of $7,954,704.22.
Section 5.03. (a) The obligations of the Borrower under Article V of this Agreement shall not be
discharged except by performance and then only to the extent of such performance. Such obligations shall
not be subject to any prior notice to, demand upon or action against the Borrower with regard to any failure
by the Borrower to pay any amount in respect of which a demand is served on the Bank pursuant to the
Guarantee. The obligations of the Borrower hereunder shall not be in any way discharged, modified or
impaired by reason of any of the following: (i) any extension of time, forbearance, concession or other
indulgence which may be granted to the Bank, the Borrower or any other person; (ii) any variation of the
terms and conditions of the Guarantee, the Fiscal Agency Agreement or the Notes, or any related
agreement; (iii) any assertion of, or failure to assert, or delay in asserting, any right, power or remedy
against the Borrower; or (iv) any other circumstances which would or might (but for this provision)
constitute a discharge or stay of, or defense to, the Borrower’s obligation to reimburse or indemnify the
Bank hereunder.
(b)
The Bank may at any time, without thereby discharging, impairing or otherwise affecting
any rights, powers and remedies hereby created or conferred upon it by this Agreement, the Guarantee,
the Notes, the Fiscal Agency Agreement or any related agreement or by law: (i) offer or agree to or enter
into any agreement for the extension or variation of the Guarantee, the Notes, the Fiscal Agency
Agreement, or any related agreement; or (ii) offer or give or agree to give any time or other indulgence to
any person or entity from whom the Bank may seek reimbursement or indemnity in respect of sums paid
out by the Bank under the Guarantee.
(c)
Any rights, powers or remedies conferred on the Bank by this Agreement shall be in
addition to, and not in substitution for or derogation of, any other right which the Bank may at any time
enjoy against the Borrower or any other person or entity in respect of reimbursement or indemnification
against payments made or liabilities incurred under the Guarantee.
(d)
The Bank shall not be obliged before taking steps to enforce any rights conferred on it by
this Agreement or exercising any of its rights, powers and remedies under this Agreement, the Guarantee,
the Notes, the Fiscal Agency Agreement or any other related agreement or by law: (i) to take action or
obtain any judgment or award in any court or other tribunal of competent jurisdiction against any other
person or entity (including persons or entities from whom it may seek reimbursement or indemnity in
respect of sums paid out under the Guarantee); or (ii) to enforce or seek to enforce any other rights it may
have against the Borrower or its rights against any other person or entity.
Section 5.04. The Borrower hereby agrees that any amount due to the Bank hereunder shall be
deemed, for purposes of Sections 6.02(b)(iii) and 7.01(d)(ii), or any successor provision, as the case may
be, of the General Conditions, to be an amount due in consequence of a guarantee extended by the Bank
to a third party with the agreement of the Borrower.